First National reports continued growth in mortgages under administration and originations for fiscal 2007

Approval as issuer of NHA-MBS and seller into Canada Mortgage Bond

programs will further diversify funding sources and reduce funding costs

TORONTO, March 5 /CNW/ - First National Financial Income Fund (TSX: FN.UN) (the "Fund") today announced its financial results for the period ended December 31, 2007, with continued growth in key metrics for First National Financial LP (the "LP") or ("First National").

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    First National's 2007 Highlights:

    -   Mortgages under Administration grew to .1 billion, up 36%
        year-over-year
    -   Mortgage originations up 49% year-over-year to .9 billion, with
        record months in June and August, 2007
    -   Revenue, excluding effect of non-cash, fair value adjustments, up 36%
        year-over-year to 3.3 million
    -   Adjusted EBITDA*, excluding effect of non-cash, fair value
        adjustments, up 44% year-over-year to .4 million
    -   Monthly distributions for the Fund increased 31.5% in June, 2007
    -   Special year-end distribution of $ 0.06 per unit declared by the Fund
    >>

"First National's leading position in the single-family mortgage broker channel led to record origination volume in 2007 and a high water mark of  billion for mortgages under administration," said Stephen Smith, Chairman and President, First National Financial LP.

"Excluding the fair value adjustments, we also achieved strong top and bottom line growth. First National's commendable performance in the face of challenging market conditions is a clear indication of our inherent strengths and ability to effectively execute the growth strategy. As we progress through 2008 - the 20th anniversary of First National's founding - we look forward to delivering continued unitholder value."

"Our revenue growth also benefited from increased income from mortgage servicing, a direct result of our growth in mortgages under administration," added Moray Tawse, Vice President, Mortgage Investments, First National Financial LP. "Another highlight in 2007 was being granted approval to be an issuer of NHA mortgage-backed securities and a seller to the Canada Mortgage Bond program. These developments provide further funding diversification and help reduce our overall funding costs."

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    Selected Financial Highlights for First National

                                 Three months ended          Year ended
                             ------------------------------------------------
                              December    December    December    December
                              31, 2007    31, 2006    31, 2007    31, 2006
                             ------------------------------------------------
    For the Period                              (Cdn $ 000's)
    Revenue                       68,272      49,551     238,971     193,930
    Net income                    24,050      18,038      72,844      57,898
    Adjusted EBITDA(1)            24,389      18,328      74,086      68,158
    At Period end
    Total assets                 460,336     393,016     460,336     393,016
    Mortgages under
     administration           33,114,415  18,607,866  33,114,415  18,607,866

    Note:
    (1) This Non-GAAP measure adjusts income before income taxes by adding
        back expenses for management compensation and interest expense on
        shareholder loans which consist primarily of distributions to
        shareholders while First National operated as a private company. This
        measure also includes a deduction in the year ended December 31, 2006
        of 0 ($Nil for the quarter ended December 31, 2006) for
        normalized compensation for each of the two senior management
        executives based on compensation policies that took effect on closing
        of the initial public offering.
    >>

2007 Annual and Fourth Quarter Results

--------------------------------------

Mortgages under administration for First National were .1 billion as at December 31, 2007, up 6% from .2 billion as at September 30, 2007 and up 36% from .4 billion as at December 31, 2006. The growth was mainly due to an increase in mortgage originations, which totalled .9 billion for the year, up 49% from .3 billion in 2006. The increase was largely attributable to First National's growing market share in the single-family residential mortgage broker channel and higher volumes of commercial mortgage transactions.

First National's revenue and Adjusted earnings before income taxes, depreciation and amortization ("Adjusted EBITDA"*) for the year were decreased by .3 million of non-cash fair value adjustments (the "Adjustments"). The Adjustments consisted mainly of the previously announced non-cash fair value adjustment that was recorded in the third quarter of 2007 and was related to First National's securitization-related assets. This was due to unfavourable capital market conditions associated with the asset-backed commercial paper ("ABCP") market. Total revenue for the year for First National was 9.0 million, up 23% from 3.9 million in the previous year. Excluding the effect of the Adjustment, total revenue grew 36% year-over-year to 3.3 million. This revenue growth was primarily due to increased placement fees on higher origination volumes and increased mortgage servicing fees on higher mortgages under administration. For the fourth quarter, revenue was .3 million, up 38% from .6 million for the same period last year.

First National's Adjusted EBITDA for the year was .1 million, up 9% from .2 million in the previous year. Excluding the effect of the Adjustments, Adjusted EBITDA grew 44% year-over-year to .4 million. For the fourth quarter, Adjusted EBITDA was .4 million, up 33% from .3 million for the same period last year.

Distributable Cash

------------------

The Fund's distributable cash* for the year ended December 31, 2007 was .8 million or .26 per unit and distributions declared totalled .3 million or .21 per unit. This represents an annualized distribution rate of .25 per unit when taking into account the distribution increase of 31.5%, which was effective with the May, 2007 distribution paid in June. The Fund also declared a special year-end distribution of $ 0.06 per unit.

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    Statement of Distributable Cash
    (in thousands $s, except where noted)

                                                         For the
                                                         quarter     For the
                                                           ended  year ended
                                                        December    December
                                                        31, 2007    31, 2007
    -------------------------------------------------------------------------
    First National Financial LP
                                                       ----------------------
    Distributable Cash from First National
     Financial LP                                         14,873      74,373
                                                       ----------------------
                                                       ----------------------

    First National Financial Income Fund

    Weighted Average Share of Distributable
     Cash from First National Financial LP                 2,970      14,853

    Trust Administration Expenses                              6          24
                                                       ----------------------
    Distributable Cash from First National
     Financial Income Fund(1)                              2,964      14,829
                                                       ----------------------
                                                       ----------------------
    Distributable Cash per Unit ($/Unit)(1)                 0.25        1.26
                                                       ----------------------
                                                       ----------------------
    Distributions Declared                                 4,396      14,278
                                                       ----------------------
                                                       ----------------------
    Distributions Declared per Unit ($/Unit)                0.37        1.21
                                                       ----------------------
                                                       ----------------------
    Payout ratio                                            148%         96%
                                                       ----------------------
                                                       ----------------------

    (1) Distributable cash and distributable cash per unit are non-GAAP
        measures generally used by Canadian open-ended trusts as an indicator
        of financial performance. They are considered key measures as they
        demonstrate the cash available for distributions to unit holders.
    >>

Initiation of Distribution Reinvestment Program (DRIP)

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On March 4, 2008, the Fund's Board approved a distribution reinvestment program ("DRIP") targeted to be effective with the March, 2008 distribution to be paid in April. Through the DRIP, unitholders can increase their monthly holdings by reinvesting their monthly distributions in additional units of the Fund without incurring brokerage or administrative fees. The reinvestment price will be based on the volume-weighted average price of all Fund units traded on the TSX for the 10 business days prior to the distribution date. In addition, DRIP participants will receive bonus units amounting to 5% of their monthly reinvested distributions. More information about the DRIP program will be available on the 'Investor FAQ' section of the Fund's website, www.firstnational.ca over the next few weeks.

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    Conference Call and Webcast

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    Conference Call and Webcast             March 5, 2008, 10 a.m. ET
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    Participant Numbers                     416-644-3415 or 1-800-733-7571
    -------------------------------------------------------------------------
    >>

The call will be webcast live and archived on First National's web site at www.firstnational.ca. Following management's presentation, there will be a question and answer session for analysts and institutional investors.

A taped rebroadcast will be available to listeners following the call until 12 a.m. (ET) on March 12, 2008. To access the rebroadcast, please dial 416-640-1917 or 1-877-289-8525 and input passcode 21259864 followed by the number sign.

Complete consolidated financial statements for the Fund and the LP as well as management's discussion and analysis are available at www.sedar.com and at www.firstnational.ca.

Annual General Meeting

----------------------

The Fund will hold its Annual General Meeting of unitholders on Tuesday, May 6, 2008 at 10 a.m. (ET) at The Gallery at the TSX Broadcast & Conference Centre in Toronto, Ontario.

About First National Financial Income Fund

First National Financial Income Fund (TSX: FN.UN) owns a 19.97% interest in First National Financial LP, a Canadian-based originator, underwriter and servicer of predominantly prime residential (single family and multi-unit) and commercial mortgages. With more than billion in mortgages under administration, First National is Canada's largest non-bank originator and underwriter of residential mortgages and is among the top three in market share in the growing mortgage broker distribution channel. For more information, please visit www.firstnational.ca.